Come Off It, Neil: Vodafone Is Still a Dividend Heavyweight Buy

LONDON -- When the country's finest dividend investor took a swing at the U.K.'s greatest dividend behemoth, it caused quite a dust-up.

Seconds out!
In February, City legend Neil Woodford laid into Vodafone  (LSE: VOD  ) (NASDAQ: VOD  ) , dropping his entire stake in a single swipe.

Last week, the Fool's own investment heavyweight, Maynard Paton, also joined battle, backing what he called "the most contentious sell decision in the market today."

Poor Vodafone. After years of sterling dividend service, it deserves better. Somebody should come to its defense. And here I am.

Woodford listed four reasons to sell Vodafone. Falling revenues in southern Europe, the decision to deny shareholders the Verizon Wireless dividend, concerns about data-service profits, and dividend cash flow cover falling to dangerous levels.

Woodford apparently sold Vodafone at 1.71 pounds. Earlier this week it traded at 1.90 pounds. Despite Woodford giving it his best shot, Vodafone is neither down nor out. In fact, it's risen up to 11% in four months. 

Did Woodford's punches really connect?

Below the belt
That first jab at Vodafone was a low blow. I mean, if you sold every stock in the FTSE 100 with falling southern European revenues, your portfolio would empty in a hot minute. Blame the misconceived single currency, Vodafone is innocent.

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So what about that Verizon dividend? Sure, it's a pity Vodafone didn't dish out the 2.1 billion pound Verizon dividend to investors in May, but maybe that money is better spent buying airwaves to run 4G networks.

Vodafone is due to start rolling out its British 4G network this summer, and aims to offer 40% coverage in its five main European markets by March 2015, all of which costs money.

On a current yield of 5%-plus, dividend investors are already doing very nicely as it is.

Will data services generate enough profits? Full-year results, published last month, showed a 14.4% rise in data revenue in northern and central Europe, as smartphone penetration nears 36% in the region.

Data revenue even rose 9.7% in southern Europe, despite the euro, and grew strongly in emerging markets such as India (19.8%), South Africa (16.1%), and Egypt (29.6%). That may not be good enough for Woodford, but it's good enough for me.

Sucker punch
Finally, Woodford is worried that cash flow cover for the dividend has fallen to "uncomfortably low levels."

To be fair, that worries me too.

Full-year results show free cash flow falling 8.1% to 5.6 billion pounds. Yes, you read that right: 5.6 billion [punds. That's an awful lot of cash flow.

Vodafone still churns out money. Management recently proposed a final dividend of 6.92 pence per share, giving a total dividend of 10.19 pence per share, a rise of 7%. Which wasn't bad for a company that is supposed to be on the ropes.

I accept the dividend may come under pressure, but with the yield topping 5% it is still 50% higher than the FTSE 100 average of 3.6%.

Forecast earnings-per-share growth of 4% to March 2014 and 7% to March 2015 also look pretty solid, leaving Vodafone on a modest 12.3 times earnings, just below the FTSE 100 index average of 12.75 times.

Clearly, some people still want to own Vodafone. And I'm one of them. So is Citigroup, which has just reiterated its buy recommendation, with a target price of 2.15 pounds. 

For long-term dividend glory, Vodafone looks like a contender to me.

Anyway, to find out which stocks Neil Woodford does like, you can download our in-depth report, "Eight Top Blue Chips Held By Britain's Super Investor."

This free report by Motley Fool analysts shows where Woodford believes the best high-yield stocks are to be found today.

Availability is strictly limited, so please download it now.

Strategies: How to get inspiration for your…

Have you always wanted to be your own boss?

Are you unemployed and can't find a good job? Do you suddenly find yourself paying attention to late-night infomercials about working from home?

Perhaps you need to start thinking seriously about starting your own business.

But what kind of business should you start?

About half of Americans want to own their own business, according to several surveys. About 48% of all adults and 55% of those in their 20s who don't already work for themselves want to start a company one day, according to two 2013 studies, one each from UPS and the University of Phoenix.

QUIZ: Take our test to find the small business that's right for you
STORY: What kind of small business do you want to start?

If you want to own a business but don't know what kind, don't worry. Most people with entrepreneurial dreams don't know what kind of business they want to start either.

Here are a few hints to help you hone in on the best kind of business for you to start:

• Your desires. Maybe you're one of the seemingly lucky ones who already have an idea of what business they would like.

But just because you've got a passion for something doesn't necessarily mean it's a good business for you. For instance, you may dream of opening a restaurant — many people do — but that's a very challenging type of business and expensive to start.

Before plunging in, take a look at the realities.

If you love photography and think that weddings might be your thing, also think about whether you want to spend nights and weekends with stressed-out brides.(Photo: Jeff Cummings, Getty Images)

• Your experience. Often the easiest transition to self-employment ! and the fastest track to income is sticking with the kind of work you've already done.

You already may have contacts or potential customers in your address book, know the market and industry well, and have strong sources to direct you and recommend you.

But examine whether you can do this business on your own. Just because you've done something well for a long time doesn't necessarily mean you want to keep doing it.

• Your hobbies or interests. Many people dream of turning their hobbies into their profession.

Sometimes that works really well, especially if it's a retirement business. But I'm not always a big proponent of turning a hobby into a full-time occupation.

You may turn something that's a source of pleasure into a source of stress.

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Remember, doing something to please yourself isn't always the same as doing it to please customers. You may love photography but change your mind after 50 weddings with demanding brides and grooms.

• Your connections. Let's face it, lots of people start their businesses because they know someone, making the transition to self-employment easier.

Perhaps you know someone who needs an independent sales representative for a company or someone in a big corporation who can outsource work to your new consulting business. Many people go into business after a potential partner asks them to join a company.

Just be cautious. Make certain you like the kind of work you're going into, and put all agreements in writing.

• Your skills. Why not do what you're good at?

This may be different from your experience or hobbies. For instance, you may be the person your neighbors turn to for installing electronic equipment or decorating their homes. Is that a business opportunity for you?

• Your opportunity. Look around. What's missing in your community, industry or profession! that you! might be able to provide?

Usually, many services or products still need to be provided. Maybe a service is available elsewhere but not locally. Perhaps a big company is neglecting or leaving a line of business that you could serve.

• Your lifelong learning. Believe it or not, one good way to learn something is to start a business doing it.

Yes, you may need to get some additional training or education, and at first you won't be able to charge as much as those who already know more. But you can learn a lot while you're on the job.

If you're not exactly certain what business you want to start, just stay open and flexible.

When I started my business in 1986, my idea for my company was completely different than what it has evolved into today. But when new opportunities came my way, I jumped.

I'm still self-employed all these years later.

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Rhonda Abrams is president of The Planning Shop and publisher of books for entrepreneurs. Her most recent book is Entrepreneurship: A Real-World Approach. Register for Rhonda's free newsletter at PlanningShop.com. Twitter: @RhondaAbrams. Facebook: facebook.com/RhondaAbramsSmallBusiness.Copyright Rhonda Abrams 2014.

What companies want from college grads

Employers expect to hire more college graduates from the class of 2014 than from the class of 2013, shows an update to the National Association of Colleges and Employers job outlook survey out Wednesday.

Employers plan to hire 8.6% more graduates this year than from the class of 2013. Though NACE says that rate of increase is about the same as in past years.

"Even though it's positive, we consider it somewhat flat," says Andrea Koncz, employment information officer for NACE. "It's not going gangbusters or anything."

So what's the recipe for job success? Bachelor's degrees are most in demand. And business, engineering, and accounting majors – you are a hot commodity. Nearly 70% of the employers who responded to the survey are hiring business majors. That's the most of any major.

Business majors also have the highest average starting salary, according to another survey from NACE out earlier this month. The average starting salary for business majors from the class of 2014 is $53,901, down slightly from the class of 2013's $54,234.

Health sciences and education students – sorry. You're at the bottom of the list. Less than 5% of employers want to hire you. Keep in mind though: The data reflect the types of companies that responded to the survey. The majority of respondents represent industries including finance, insurance and real estate, Koncz says.

But the average starting salary for health sciences gained the most ground this year. Students with that degree are expected to make an average of $51,541, up 3.7% from $49,713 last year.

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Fall recruiting for the class of 2015 looks even more promising. About 43% of companies said they plan to hire more grads during fall 2014 recruiting than last year. During fall 2013 recruiting, less than a third of employers said they planned to hire more graduates. Still, Koncz says, "it's a bit ear! ly to see what they're actually going to do."

TIAA-CREF in $6.25B deal to buy Nuveen Investments

In a deal that reshuffles the mutual fund space, TIAA-CREF said Monday it had agreed to acquire Nuveen Investments Inc. for $6.25 billion from a group led by private-equity firm Madison Dearborn Partners.

The deal is the largest transaction in the asset management business since 2006 and is a major coup for TIAA-CREF, an asset manager with $569 billion under management and roots as a major retirement servicer for nonprofit organizations such as universities and hospitals.

The acquisition deepens TIAA-CREF's investment expertise and distribution capabilities in the adviser-sold market for mutual funds, given Nuveen's deep relationships with broker-dealers and financial planners, according to industry consultant Geoffrey H. Bobroff.

“It's a significant step for TIAA-CREF, which has not been known to be an acquirer,” said Mr. Bobroff. “It is a distribution play.”

Nuveen, which has its roots in municipal bonds, brings some $221 billion in assets and an entrenched brand in mutual funds. Through the years, the company has acquired boutiques and worked to expand its expertise in areas such as equities and commodities. The business includes one of the largest sponsors of closed-end funds, as well as $54 billion in open-end mutual funds and offerings in separately managed accounts.

Madison Dearborn was the lead buyer in the $5.75 billion deal in 2007.

What TIAA-CREF's acquisition of Nuveen means for financial advisers

Watchdog: IRS Enjoys Luxury Rooms at Conference

WASHINGTON (AP) -- Already under siege, the IRS was cited by a government watchdog for a $4.1 million training conference featuring luxury rooms and free drinks, even as conservative figures told Congress Tuesday they had been abused for years while seeking tax-exempt status.

A total of 132 IRS officials received room upgrades at the 2010 conference in Anaheim, Calif., according to the report being released by J. Russell George, the Treasury inspector general for tax administration.

One official stayed five nights in a room that regularly goes for $3,500 a night, George's report said, and another stayed four nights in a room that regularly goes for $1,499 a night. The agency paid a flat daily fee of $135 per hotel room, it said, but the upgrades were part of a package deal that added to the overall cost of the conference. Without the upgrades, the IRS could have negotiated a lower room rate, as required by agency procedures.

The inspector general's report was surfacing as the IRS came under fire again in connection with its targeting of conservative groups during the 2010 and 2012 elections. The Associated Press obtained a copy of the IG report ahead of its release.

In all, the IRS held 225 employee conferences from 2010 through 2012, at a total cost of $49 million, the report said. The Anaheim conference was the most expensive, but others were costly, too.

In 2010, for instance, the agency held a conference in Philadelphia that cost $2.9 million, one in San Diego that cost $1.2 million, and one in Atlanta that also cost $1.2 million.

Acting IRS Commissioner Danny Werfel has called the conferences "an unfortunate vestige from a prior era." Werfel took over the agency about two weeks ago, after President Barack Obama forced the previous acting commissioner to resign.

For more than 18 months during the 2010 and 2012 election campaigns, IRS agents in a Cincinnati office singled out tea party and other conservative groups for additional scrutiny when they sought tax-exempt status, according to a previous report by George.

The report issued last month said tea party groups were asked inappropriate questions about their donors, their political affiliations and their positions on political issues. The additional scrutiny delayed applications for an average of nearly two years, making it difficult for many of the groups to raise money.

On Tuesday, leaders of conservative groups complained to Congress that they were abused by the Internal Revenue Service for years as they sought tax-exempt status, including questions one Iowa anti-abortion group said it got about prayer meetings.

The testimony of the tea party and other conservative organizations before the House Ways and Means Committee was the first time groups complaining about the IRS's treatment have appeared directly before lawmakers since the IRS revealed the problem -- and apologized for it -- last month. They talked about applications for tax-exempt status that took three years for approval -- or in some cases haven't yet been approved -- and queries from the agency about the identity of their donors, video of meetings and whether speakers at such gatherings expressed political views.

"I'm a born-free American woman," Becky Gerritson, president of the Wetumpka Tea Party in Alabama, tearfully told the committee, adding, "I'm telling my government, you've forgotten your place."

Sue Martinek, president of the Coalition for Life of Iowa, an anti-abortion group, said the IRS asked them about "the content of our prayers."

"As Christians, we know we needed to pray for better solutions for unplanned pregnancies," she said.

The president of another group, the National Organization for Marriage, said the IRS publicly disclosed confidential information about donors. George Eastman said he thought the IRS's release of that information was designed to intimidate contributors to the group -- which opposes same-sex marriage -- "to chill them from donating again."

At Tuesday's Ways and Means hearing, committee Chairman Dave Camp, R-Mich., said the conservative groups were being singled out for their beliefs.

"They are Americans who did what we ask people to do every day -- add their voice to the dialogue that defines our country," Camp said. "And for pursuing that passion, for simply exercising their First Amendment rights -- the freedoms of association, expression, and religion -- the IRS singled them out."

The committee's top Democrat, Rep. Sander Levin, said it was time to correct the IRS's problems.

"You are owed an apology," Levin, from Michigan, told the witnesses. "We say to you that each of us is committed to doing our part to ensure that."

But even as they joined in expressing criticism of the IRS's behavior and sympathy for how witnesses' groups were treated, some Democrats tempered that. They noted that the IRS is responsible for seeing if organizations qualify for tax-exempt status -- which includes not approving requests by groups that primarily engage in election campaigns.

"None of you were kept from organizing, or were silenced," said Rep. Jim McDermott, D-Wash. "We're talking about whether or not American taxpayers will subsidize your work. We're talking about a tax break."

Rep. John Lewis, D-Ga., noted that IRS commissioners over the past decade were appointed by President George W. Bush, a Republican, and said, "This has nothing do with red versus blue."

Earlier, the leader of a small South Carolina tea party group said her organization first applied for tax-exempt status in 2010 -- and is still waiting for the application to be processed.

"Nearly three years in waiting for an answer is totally unacceptable," said Dianne Belsom, president of the Laurens County Tea Party. "The IRS needs to be fully investigated and held accountable for its incompetence harassment and targeting of conservative groups."

Belsom said her group in rural South Carolina has about 60 members and "seeks to educate ourselves and fellow citizens on various issues pertinent to living in a free country." The group also holds candidate forums in election years, she said.

"I'd like to note that our group is a small-time operation with very little money and this represents a complete waste of time by the IRS in terms of any money they would collect if we were not tax-exempt," Belsom said.

Last minute tax tips as April 15 deadline nears

Just days to go until the April 15 deadline, and we're rolling out 12 lucky tax tips for 2013 returns. Some might save you a little money; some might save a few headaches.

1. The rules haven't changed, but there is a new simplified method for 2013 returns for figuring out a home office deduction. Mark Steber, chief tax officer at Jackson Hewitt, said many taxpayers who own a small business or work from home may qualify for a home office deduction, but don't take it because of the complexity. The new method might help. The office area must be used on a regular basis for business and be either for the convenience of the employer, or used by a self-employed person to meet clients. The space must be used exclusively for the business; it can't be used to store seasonal decorations, as a guest room or entertainment room.

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2. Do you have college-age children? Or did you head back to college yourself? The American Opportunity Credit is worth up to $2,500 per eligible college student. The Lifetime Learning Credit can apply for college students, graduate school and professional degrees. Income limits and other rules apply. Get Form 1098-T to show the student attended an eligible institution.

3. Don't overlook a 0% rate on long-term capital gains. Yes, it's a limited tax break that applies in 2013 for married couples with a taxable income of $72,500 or less; the limit is $36,250 for single filers. If you hold onto stock for longer than 12 months, you can benefit from a reduced tax rate on long-term capital gains. But remember, your taxable income is going to include capital gains.

4. Casualty losses are generally deductible in the year the casualty occurred. But not always. Barbara Weltman, author of "J.K. Lasser's 1,001 Deductions and Tax Breaks 2014," noted there are some cases where you can take the disaster loss in the preceding tax year, if you have a casualty loss from a federally declared disaster that occurred in an area warranting ! public or individual assistance. For example, Colorado flood victims have until Oct. 15, 2014, to decide when to claim disaster losses arising from last September's flooding.

5. Cash any U.S. savings bonds in 2013? Typically, interest is taxable on federal returns, but not on the state income tax return. Some very complex rules give you a shot at being able to exclude income on federal taxes, if the savings bonds were cashed in the same year that the money was used for college tuition. The college-education related tax break would apply to a Series EE bond issued in 1990 or after or a Series I Bond if your modified adjusted gross income is less than $142,050 if married filing jointly. Another twist: The bond owner listed on the bond must be at least 24 years old before the bond's issue date. If you claim the exclusion, the IRS warns that it will check it against bond redemption information from the Department of Treasury. You'd have to pay qualified education expenses for yourself, your spouse, or a dependent for whom you claim an exemption on your return. So, no grandparents cannot use the tax break unless the grandchild is their dependent.
6. Alternative Motor Vehicle credits can be confusing. IRS publications note upfront that the Plug-In Electric Vehicle Credit has expired. But these credits have different names and rules. And the Plug-In Electric Drive Motor Vehicle Credit still applies to cars like the Chevy Volt and has not expired. We're looking at a potential $7,500 federal tax credit. The Plug-In Electric Drive Motor Vehicle Credit begins to phase out once 200,000 of the vehicles per manufacturer have been sold for use in the U.S., said Mark Luscombe, principal analyst for CCH Tax & Accounting North America.

7. Do you have an adjusted gross income of $58,000 or less? The Free File program offered via the Internal Revenue Service website connects tax filers to free software to prepare and file taxes online. See www.irs.gov.

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8. Did your child attend day camp last summer? What does that have to do with taxes? If you're working, the cost of day camp can count as an expense toward the Child and Dependent Care Credit. The expenses must be needed so you and your spouse, if filing jointly, could work or look for work. The child must be younger than 13 when the care was provided. The credit could be 20%-35% up to $3,000 in work-related expenses for one child; or $6,000 for two or more. On the 2013 return, your adjusted gross income can be more than $43,000 but at that income the percentage used to calculate the credit is 20%.

9. It's OK, really, to hang up on the IRS. Ignore fraudsters who are claiming to be from the IRS and demanding money or promising refund money.

10. low down. Did you review all the Social Security numbers on your return? Double check the math. Mistakes can delay refunds.

11. Running late? See Form 4868 for an automatic six-month extension until Oct. 15. If you qualify, this form does not give you more time to pay taxes. If you do not pay the amount due by the regular due date, the IRS notes, you will owe interest and possibly penalties.

12. Did you pay for private mortgage insurance? The PMI premiums could be deductible if your adjusted gross income didn't exceed $109,000 in 2013 and you took out that mortgage in 2007 or after.

Contact Susan Tompor at stompor@freepress.com. Follow her on Twitter @Tompor